C2 Background
German economy cuts marketing budgets due to pandemic

24.11.2020 Marketing budgets in Germany are coming under pressure as a result of the COVID 19 pandemic: live events and trade fairs have so far accounted for around a third of total expenditure in business-to-business (B2B) communication. By the end of 2020, however, almost all important trade fair events have been cancelled.

Less spending on marketing in the pandemic: a study by the bvik provides current figures from companies in Germany.
© Photo: @StartUpStockPhotos - pixabay.com
Less spending on marketing in the pandemic: a study by the bvik provides current figures from companies in Germany.

This will force a rethink of B2B marketing spending. Just under one in two marketing managers is already expecting a sharp reduction in the budget. These are the results of the study "B2B Marketing Budgets", the ninth edition of which was published by the Bundesverband Industrie Kommunikation e.V. (bvik). "For all providers and players involved in the field of trade fairs and live events, the year 2020 is an 'annus horribile' with far-reaching consequences," says Dr Andreas Bauer, bvik board member. "The downward trend of the past few years is continuing in internal and external B2B marketing expenditure."

Cuts for B2B marketing in Germany and worldwide

As the study shows, external B2B marketing expenditure in 2020 - for the most part still without the corona effect - fell by an average of three percent compared to the previous year. The global budgets for externally purchased marketing and communication services are also affected by this, with a decline of around two percent. In 2019, international activities had still increased against the general trend.

Due to the pandemic, 46 percent of the experts surveyed expect marketing budgets in Germany as a whole to decline – 30 percent expect strong savings and 16 percent slight ones. Globally, 61 percent of the experts believe that the budget will be cut back: 34 percent expect major cuts and 27 percent slight cuts. Internal and external B2B marketing expenditure taken together had already declined in the previous year and recorded a drop of 23 percent from 2018 to 2019.

Outlook 2021

Management and sales are looking for alternatives to compensate for the cancelled trade fairs and live events. While digital sales and communication channels were important even before the pandemic, they have found unprecedented acceptance in the crisis. This development increases the importance of marketing experts who develop and implement new online formats.

"As market observers, we assume that B2B marketing in Germany will have to prepare for hard times," says Prof Dr Carsten Baumgarth from the University of Applied Sciences (HWR) in Berlin and scientific director of the bvik study. "Burying your head in the sand is not an option. New topics like 'Digital Marketing Leadership', 'Purpose Orientation' or 'New Brand Management' are three important future topics that offer new opportunities. Despite all budget restrictions, decision-makers should invest in the skills and abilities of their own employees. The lean, agile and innovative years will come."

Industry visits trade fairs online

Many operating companies have reacted to the COVID 19 restrictions with virtual trade fairs and have already gained initial experience with the digital format: 36 percent of the industrial companies (n=173) stated that they had had good to very good experience with the virtual trade fair visit – another almost 47 percent were at least not dissatisfied and only around 17 percent rated the digital offer as insufficient. This is the result of a bvik survey on digitalisation in B2B marketing. Among the advantages of virtual events, more than 70 per cent name cost and time savings as the most important. On the negative side, almost 70 per cent also cite lack of contact. In addition, the participants lack the real experience with the products – say 62 percent. For the future, almost all industrial companies and trade fair organisers agree that virtual trade fairs will complement real events.